Admin Previews Presentation to the Board on College’s Financial Situation at Student Forum

Part two of this piece, which details student concerns brought up during the forum and the administration’s responses, can be found here.

At this Friday’s Board of Manager’s meeting, the administration will present their findings on Haverford’s finances and models they have developed to address the College’s ongoing financial deficits.

In a public forum held last Monday, the administration presented their findings and models to the student body for feedback before the presentation to the Board. The presentation was entitled “Long-Term Economic Considerations: Reaching Financial Equilibrium as We Advance Our Mission” and given President Kim Benston, Mitch Wein, Vice President of Finance and Chief Administrative Officer, and Jess Lord, Dean of Admissions and Financial Aid. They began by summarizing the College’s current financial situation, then moved on to discussing some of the models they will present to the Board on Friday. These models were created through a collaborative effort of the President’s senior staff and others. They were formulated with the input from administrators in charge of such diverse areas as college finances, investment, student life, admissions, and the Provost’s office and have evolved as faculty, staff, and students have provided feedback.

Each model works by pulling on one or more of the “levers” affecting either revenue or expenses, explained Wein. These include the number of students enrolled, faculty/staff compensation, debt service, general operations, and facilities maintenance or expansion. While each model gave a possible scenario, the presenters stressed that the numbers shown were only rough approximations. All models had the goal of approximate financial equilibrium by the fiscal year (FY) 2021. No model would decrease the current financial aid budget or make any changes to the College’s policy of meeting students’ full demonstrated need.

The first three models presented focused solely on what would happen if only one lever were changed. Due to the more extreme impact these proposals would have on the quality of student experience and academics, Benston said he could not in good faith support them.

For example, one would be adding approximately 28 students per year until FY2021 with only one additional faculty member, no extra staff, and no expansion to facilities or programs. After FY2021 when enrollment would become stable, the model also predicts a slight drop back into a deficit. The second was to only change the discount rate, meaning a much larger percentage of applicants would be considered need-aware than in other models. This could have a severe effect on the socioeconomic diversity and composition of the student body. The third was to cap the increase in faculty/staff compensation at less than half of inflation. Benston stated this would be an ethical problem and have a strong negative impact on the College’s academics because compensation would no longer be competitive, making it more difficult for the College to attract and retain high-quality professors.

The first three models were presented to show extreme measures the College could take, said Benston, but are extremely unlikely to be implemented. The presentation then turned to blended models, which combine aspects of the first three to ensure the impact of changing each lever is not drastic. The administration has come up with several versions of the blended model, each pulling each lever at different rates and coupled with other incremental adjustments to revenues and expenses, but all with the goal of approximate financial equilibrium by FY2021. All blended models presented also showed the College having positive net operating results in the years after FY2021, in which case excess revenue could be reallocated into other budget areas, potentially including financial aid.

Though the administration noted there were more versions of the blended model, they only went through two in detail during the presentation. The first would slightly drop the discount rate from the current 42%; increase enrollment by seven more students each year with a correlating increase in faculty/staff hiring and facilities and program budgets; change the debt service plan; and continue the current pattern of low yearly increases to faculty/staff compensation until 2021 after the College reaches equilibrium. The second presented essentially the same model, but without the increase in enrollment. This model would decrease the discount rate slightly more than the first. Should the Board choose to make changes, a blended model seems by far the most likely path, said Benston. Lytle noted that the College would continue make year-to-year tweaks in response to the efficacy of the chosen model, for example slightly raising compensation or marginally increasing enrollment.

The administration will present their general findings on the College’s finances and these models to the Board on Friday. The presentation will be fairly similar to the one given to students on Monday night, though with more technical information on the budget, according to Lytle. Benston stressed that though his office was responsible for the creation and analysis of these models, the final decision would be up to the Board.

It is not certain a final decision will be reached during this Friday’s meeting, although any decision affecting the upcoming admission cycle would need to be made no later than June. The Board may return the proposals to the administration for further study or defer for other reasons. During Friday’s meeting, they will also hear end-of-year reports from various groups, including Students’ Council and Honor Council; approve a final version of next year’s operating budget; and give formal approval to faculty hiring decisions, among other things.

Benston ended Monday’s meeting with another call for student input. He urged anyone with questions or concerns to send him an email. The administration will present community responses to the models at Friday’s meeting.